Tech Mahindra Q2 net up 373 %

MUMBAI, October 18, 2006:

Key highlights:

• Net profit after tax of Rs 177.1 crores and revenue of Rs 697.7 crores
• Over the corresponding quarter of the previous year, net profit after tax grew by 373 % and revenue grew by 183 %
• Over the previous quarter, net profit after tax grew by 66 % and revenue grew by 19 %
• Net profit includes prior period tax refund of Rs 33.9 crores
• Headcount crosses 15,000 mark
• Tech Mahindra ranked 3rd worldwide in BSS SI by Gartner

Financial Summary

Tech Mahindra Limited, one of the largest solution providers in the telecom space, announced a 373 % growth in net profit after tax and 183 % increase in revenue for Q2 FY07 over the corresponding quarter in the previous year. Tech Mahindra reported consolidated net profit after tax of Rs 177.1 crores for Q2 FY 07 as against Rs 37.4 crores in Q2 FY 06. The company's revenue was Rs 697.7 crores for Q2 FY07 as against Rs 246.9 crores in Q2 FY06.

On a sequential basis from Q1 FY 07 to Q2 FY 07, profit after tax grew 66 % and revenues grew 19 %.

The company's cash and cash equivalents were Rs 452.5 crores as of September 30, 2006.This includes Rs 116.3 crores raised in the initial public offering of the company.

Operations

Tech Mahindra has continued to focus on increasing its depth and breadth of domain capability to serve the Telecom eco-system. During the quarter, this focus has led to growth and significant enhancement of value to our existing clients and large end-toend engagements with new clients around new technologies, solutions and service offerings.

In the BSS area, Tech Mahindra won a three year managed services contract to help a new MVNO rollout an integrated platform for its operations in a very short time with best practices for the entire billing and customer care function including portal services and payment gateway.

In the OSS and Next Generation Networks area, for a large Tier 1 telecommunications provider, Tech Mahindra created an automated regression testing platform for the Next Generation OSS to improve reliability and accelerate introduction of their next generation network in the market.

Tech Mahindra won a contract from a large Tier 1 telecommunications provider to help accelerate the market rollout of their strategic IPTV solution by leading the integration and testing of new technology components and OSS.

In the Value Added Services ( VAS ) space, Tech Mahindra was chosen as a partner for Mobile Content Hosting and Delivery platform development by UEFA, a premier sports body in Europe. This involves creation of the platform and integrating the platform with operator networks worldwide to deliver premium content from UEFA to subscribers worldwide.

Tech Mahindra created a joint venture with Motorola to address opportunities in the VAS applications area. This joint venture combines the core offerings of Motorola's application platforms with proven system integration capabilities of Tech Mahindra to offer innovative solutions in the system integration, product engineering, hosting and managed application services across the telecom ecosystem.

In the R&D area, for a large telecom equipment manufacturer, Tech Mahindra has taken over complete responsibility for the design, development and sustenance of their Next Generation Access Product thereby helping them achieve competitive price points and faster time to market for the product line.

Tech Mahindra continued to strengthen its partnerships with leading software and technology vendors for the telecom eco-system. Tech Mahindra entered into a contract to provide implementation services to a leading European billing ISV to assist them in developing solutions for leading TSPs.

Tech Mahindra signed a contract to do product development with one of the world's largest mobile transaction network providers specializing in global operator connectivity and billing.

Tech Mahindra expanded and enhanced its relationship with all its major clients during the quarter. Revenue from all Top 10 clients grew during the quarter.

The number of clients increased from 65 in Q1 FY 07 to 70 in Q2 FY 07. The number of clients with whom Tech Mahindra does annual business of USD 5 million or more increased from 7 in 1Q FY07 to 8 in the current quarter.

The company derived 17.6%, 73.2 % and 9.2% of its revenues in the current revenues from the US, Europe and ROW regions respectively.

The company has expanded its facilities inPune, Noida, Kolkata, Bangalore and Chennai during the quarter to accommodate growth.

Human Resources

Tech Mahindra's total headcount increased to 15,080 in Q2 FY 07 from 12,366 in Q1 FY 07. The company conducted its campus recruitment program, as well did offcampus recruitments at several locations in India.

Other significant events

Tech Mahindra was ranked as 3rd largest BSS SI Worldwide by Gartner (Gartner - Market Share: Business Support Systems, Worldwide, 2000-2005 by Norbert J. Scholz)

Speaking on the occasion, Mr. Anand Mahindra, Chairman, Tech Mahindra said " We have delivered yet another quarter of robust growth. Tech Mahindra is on its way to becoming the globally recognized leader in its field. On this occasion, I would again like to thank our investors for their continued faith in the company."

Mr. Vineet Nayyar, Vice Chairman & MD, Tech Mahindra said, "Our strong growth in the last quarter is a testament to our competence in the telecommunication space, and our ability to provide seamless execution to our customers"

Source : Equity Bulls

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